Investing in eco-friendly investments has come of age, as the Green Revolution recasts the playing field for future energy production. Solar, wind, geothermal and biofuels are the wave of the future. All derive their source of energy from the Sun in some fashion, but none offer as much promise of replacing fossil fuels effectively as does algae cultivation. Companies as large as Exxon-Mobil, Dow Chemical, and most recently, Unilever, have committed hundreds of millions of dollars for algae research in the race to find the most profitable path to producing material amounts of transportation fuels.
Eco-investments have been with us for some time. The term actually refers to any product that is grown and harvested directly from the earth. There is an obvious overlap when the new breed of alternative energy sources is viewed in that context. Micro-algae and its cultivation have been researched for over fifty years, but most efforts have been devoted to developing pharmaceutical and nutraceutical product offerings. Current research has focused more on which strains have the highest propensity for creating oil compounds and on what processes can extract these valuable byproducts from the tiny organisms themselves.
Per the chart above, renewable energy sources will more than quadruple by 2030, with the predominant contributions coming from wind and Biomass. The related report from the Energy Information Administration goes on to state that advances in technology will be the primary driver for this share shift, along with global oil prices and government regulations. The report goes on to say that Biomass-to-Liquid Fuel will begin in earnest in 2012 and grow by an average of 29% per year out to 2030. Biomass energy generation is foreseen to be the fastest growing sector of the industry and offers the greatest promise for above average future growth opportunities.
Over millions of years, the right combination of heat, pressure, and other factors transformed biomaterials of old into fossil fuels of today. Plants and photosynthetic microorganisms have the intrinsic ability to harvest chemical energy from sunlight, a virtually inexhaustible supply of energy. By harnessing their photosynthetic and metabolic capabilities, these simple biological systems now offer an effective way to address our world’s growing energy demand.
Algae has been named the “star” on the future stage of the Green Revolution due to decades worth of intensive research into its many varied attributes and capabilities. It can produce 15-300 times more oil per acre than conventional crops and has a harvesting cycle of 1-10 days, thus permitting several harvests in a very short time frame, a differing strategy to yearly crops. Algae can also be grown on land that is not suitable for other established crops, for instance, arid land, land with excessively saline soil, and drought-stricken land, and it can grow 20 to 30 times faster than food crops.
Investing directly in the algae revolution to come is a bit like trying to invest in an investment style, as in forex trading for example. Just as there are many brokers that offer a forex account, there are many mutual funds or exchange-traded funds, or ETFs, that offer Green investments, but none devoted solely to algae cultivation, or alga-culture as it is commonly called. There are many small and early stage development companies that are traded on various exchanges, but none with substantial revenue directly from biofuel production.
The issue now is timing. More research is necessary. When Exxon-Mobil announced their $600 million algae project a year ago, they admitted that they had researched many options, algae clearly ended up on top, but that it would take a concerted effort from many disciplines, including new technology, in order to produce large quantities of transportation fuel in 5-10 years. Most small algae enterprises today are focusing on lucrative byproducts for sustainability, until the necessary advances pave the way to future prosperity.
Much of the data above is for the domestic U.S., but our nation actually lags many others, especially China and Germany, in the manufacturing of equipment for solar energy, biofuels, fuel cells, water remediation and renewable power generation. Although there may be more inherent risk in the international market, the rewards may justify the broader view. Once again, mutual funds and ETFs may offer the best solution for diversification and risk mitigation.
At some point, there will be a stampede toward the algae sector of the renewables space, since it is an alternative energy technology with enormous upside potential. The industry typically goes into hibernation mode when oil prices drop, but another spike up, as was witnessed in July of 2008 when oil hit $145 a barrel, will put the industry back on the front burner. Oil sits at $74 today, but our military forecasts $100 a barrel by 2015. Time is of the essence.
Michael Trinkle is a writer for ForexTraders which is an
educational/informative resource center for the currency exchange market.
He has been interested in the stock market, investments, personal finance and spreading the word about currency trading for much of his life. Can be contacted on
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